Review marine insurance pricing: industry players

Review marine insurance pricing: industry players

 Noah Kupeta

HARARE, Players in the freight cargo and shipping industry have called upon insurance companies to review the pricing model charged on freight, cargo and shipping companies which they have described as “exorbitant”.

The companies have hinted that local insurance companies might be losing millions of dollars since most freight, cargo and shipping companies are relying on foreign insurance companies for their imports and exports.

Harare based freight, cargo and shipping company, Mountox Logistics Chief Executive Officer, William Makomo said local insurance companies are expensive when importing goods into the country.

“The local insurance pricing model is a little bit expensive.

“They need to review their charges, I have no doubt in my mind that local insurance companies are losing a sizeable percentage of their clientele base.

“Insurance is a necessity to us but this pricing model is just too much for us.

“Most of us now encourage our clients to consider Cost Insurance Freight (CIF),” he said.

William Makomo encouraged local insurance companies to come up with innovative marketing, advertising and pricing strategies that are fair with a business sense.

Alliance Insurance Company Risk and Fraud Officer Nigel Matienga said CIF has certain limits in Zimbabwe.

“CFI has limits on the receiving port, there are international jurisdictions boundaries that are not applicable here in Zimbabwe.

“Yes we know that insurance in Zimbabwe is currently expensive as a result of prevailing economic situation, people’s salaries are not consonant with the level of inflation.

“We are operating in a global world which comes in with golden opportunities in this industry, so there is a very bright future,” he said.

Most insurance companies in Zimbabwe as a result of monetary changes in the country are swiftly responding to the market in their premiums and policies.

Zimnat Life Assurance Trade Credit, Bonds and Guarantee General Manager Shepherd Tembo said the industry is currently market responsive in line with the hyperinflationary environment in Zimbabwe.

“For the shipping industry we have the lowest rates in the region.”

“The change from United States Dollar to Zimbabwean dollar has not significantly affected us, we are coping up by being market responsive.

“We just hope that whatever the policies the authorities come up with will stabilise the environment so that we continue with our everyday life.

“Our bonds are market determined, we continue to be innovative,” he said.

Insurance companies are encouraged to be innovative particularly in face of global market trends.

Research shows that global factors such as Brexit, technology and regulation are among the key concerns of insurers in the latter half of 2019 bringing new opportunities to Africa. 

Ocean marine insurance is designed to cover various risks and disasters related to the movement of goods.

The first and obvious protection that can be provided is for the cargoes themselves. This protection can be provided to the seller or shipper or to the buyer. Where ownership of and responsibility for the cargo are assumed is crucial in determining what coverage is needed.

 The International Union of Marine Insurance (IUMI) which represents 43 marine market insurance and reinsurance associations globally, has indicated that the ongoing global uncertainties, including the current trade tensions, will continue to impact all marine lines of business, specifically cargo and offshore energy. 

Chair of IUMI’s Cargo Committee Sean Dalton reports that the marine cargo market is in a state of “accelerating change” driven by underwriters taking action to address unprofitable results and to improve performance.

“In short, the marine underwriting sector is characterised by uncertainty.

“At a macro-level this is created by political, economic and environmental factors; and at an industry level it is due to accumulations, a worrying and increasing incidence of major losses; and through a reactivation of the offshore sector,” he said.

Stakeholders in the freight shipping and cargo industry however remain optimistic that Zimbabwe has one of the best insurance companies that meet everyday business risks and disasters.

The country’s regulator, Insurance and Pension Commission (IPEC) is defying all odds amid the escalating economic environment by tightening screws on all insurance companies to deliver.

The regulatory board in partnership with National Social Security (NSSA) and ZimSelector. Com are currently working with members of the media fraternity to drive the insurance sector.